Fundraisers and Tax Deduction

Our youth group is planning their annual authorized fundraiser for 2009. They are planning a dinner and auction. They have solicited food items and donations from local businesses and members. Can these people who donate get a tax deduction? Is there anything to consider with the deduction? Can I provide the church tax ID for these purposes?

mgattuso wrote:Our youth group is planning their annual authorized fundraiser for 2009. They are planning a dinner and auction. They have solicited food items and donations from local businesses and members. Can these people who donate get a tax deduction? Is there anything to consider with the deduction? Can I provide the church tax ID for these purposes?

First, for the sake of answering the tax questions, let's make the assumption that the fund-raiser is in accordance with Church policy and procedure. If it is in accordance with these policies and procedures then there will not be any official tax document provided to the donors. The question whether the donors can get a tax deduction is between them and the tax authorities. The tax ID you refer to is used to exempt purchases of goods or services for the Church from any sales taxes. It has no purpose in dealing with donations to the Church.

Now back to the fund-raiser you describe. You may want to refer to the Church Handbook of Instructions, Book1, page 161, in regards to the fund-raising activity you are engaging in. Pay particular attention to item 4 in the list of examples of fund-raising activities that are not approved. It says that the sale of commercial goods or services, including food storage items, is not an approved fund-raising activity. An auction is a sale. Since goods from local businesses, a commercial entity, are involved, the subsequent sale, or auction, of those goods could result in a taxable event. As such the tax exempt status of the Church could be put in jeopardy.

mgattuso wrote:Our youth group is planning their annual authorized fundraiser for 2009. They are planning a dinner and auction. They have solicited food items and donations from local businesses and members. Can these people who donate get a tax deduction? Is there anything to consider with the deduction? Can I provide the church tax ID for these purposes?

First, for the sake of answering the tax questions, let's make the assumption that the fund-raiser is in accordance with Church policy and procedure. If it is in accordance with these policies and procedures then there will not be any official tax document provided to the donors. The question whether the donors can get a tax deduction is between them and the tax authorities. The tax ID you refer to is used to exempt purchases of goods or services for the Church from any sales taxes. It has no purpose in dealing with donations to the Church.

Now back to the fund-raiser you describe. I have a question about how the type of fund-raiser you describe is authorized. Are you saying that you recieved an exception from the Church administration offices to the instructions provided on page 161 of the Church Handbook of Instructions, Book1? I am referring to item 4 of the list of examples of fund-raising activities that are not approved. That example is the sale of commercial goods or services, including food storage items. An auction is a sale and since goods from local businesses, a commercial entity, are involved, the subsequent sale, or auction, of those goods could result in a taxable event. As such the tax exempt status of the Church could be put in jeopardy.

Disclaimer: I am not a tax specialist or lawyer for the Church. The information provided is the result of a similar circumstance being presented to the Church administration office years ago and the resultant direction to not engage in any auctions involving goods or services from a commercial enterprise no matter the how these goods or services were obtained.

mgattuso wrote:Can these people who donate get a tax deduction? Is there anything to consider with the deduction?

These questions are best answered by their tax consultant (CPA, tax attorney, etc.).

mgattuso wrote:Can I provide the church tax ID for these purposes?

The Church tax ID you may be referring to is a not for profit charitable organization tax exemption number. It may or may not be the same as the Church's federal tax ID number (FEIN). The Church's tax exemption number will serve no benefit to a donor for tax deduction purposes. If the FEIN is needed by a donor, their tax consultant most likely has access to the FEIN database and can get it that way.

For tax questions as they apply to the United States and Canda priesthood leaders can get additional information by contacting:
Tax Administration
50 East North Temple Street, Room 2223
Salt Lake City, UT 84150-3620
Telephone: 1-801-240-3003 or 1-800-453-3860, extension 2-3003

mgattuso wrote:Our youth group is planning their annual authorized fundraiser for 2009. They are planning a dinner and auction. They have solicited food items and donations from local businesses and members. Can these people who donate get a tax deduction? Is there anything to consider with the deduction? Can I provide the church tax ID for these purposes?

You apparently are not aware The Church forbids auctions, they are not allowed. This position has been in place for at least 25 years.

I would also add, that nearly all fundraisers violate some or all aspects of the church policy regarding fundraisers. All ward activities are funded from the Budget Allowance.

mgattuso wrote:Our youth group is planning their annual authorized fundraiser for 2009. They are planning a dinner and auction. They have solicited food items and donations from local businesses and members. Can these people who donate get a tax deduction? Is there anything to consider with the deduction? Can I provide the church tax ID for these purposes?

You might want to review this information
http://ldsclerks.org/index.php?title=Fundraisers

rexgj wrote:You apparently are not aware The Church forbids auctions, they are not allowed. This position has been in place for at least 25 years.

I would also add, that nearly all fundraisers violate some or all aspects of the church policy regarding fundraisers. All ward activities are funded from the Budget Allowance.

I don't know anything about auctions. But the Church Handbook is very clear that fundraising is allowed under certain circumstances and in specific situations as some other means are exhausted. I encourage anyone and everyone to review the Handbook themselves (if you have access to it) or consult your local priesthood leaders. There has been a lot of discussion around this fundraising topic in the following thread:

http://tech.lds.org/forum/showthread.php?t=3144

rexgj wrote:You might want to review this information
http://ldsclerks.org/index.php?title=Fundraisers

This is a helpful link with much guidance on the subject. It can give anyone a ballpark interpretation on the topic. But again, your local leaders (or the Handbook if you are a local leader) are the best resource for inspiration and interpretation for your given circumstance.

I myself have never heard of any general church policy against auctions as a valid fundraising activity (and I have been a clerk or financial clerk for most of the past 25 years).

I have; however, heard a bishop say that he would prefer to no longer have an auction fundraiser, because it basically just shifts the burden of payment from one ward member to another (but this would not necessarily be the case if the donated items came from outside the ward).